US Treasuries
- UST showed strong gains last Friday (yields down 4-5bps along longer dated papers) reacting to the weaker-than-expected September CPI at +2.2% yoy (consensus +2.3%)
- We expect mild support for UST in the coming week, and foresee 2x10 spread remaining relatively tight near 80bps (78bps last week). The 10T should remain in range unless fresh data extremely disappoints or Fed-speak increasingly dovish.
Malaysia
- Bonds stood firm as players took a breather from prior net selling activity as UST yields came off their peak.
- In the very immediate term horizon, we think some shortening of duration may emerge ahead of CPI release this week (and to continue if inflation does trek higher).
- For the coming week, 10y MGS expected to hover just above 3.90% whilst 3x10 spread to widen at >50bps and 5x10 spread >30bps.
Thailand
- Optimism on clearer path to Thailand's election in 2018, and fresh uncertainties over US tax reform plans bolstered demand for Thai equity and bond markets last week.
- Post weaker-than-expected US inflation and external uncertainties, expect bond market to outperform this week and auction of LB466A on Wednesday would receive firm demand after solid buy of LB26DA auction in the prior week.
Indonesia
- Reflecting fresh UST gains we expect support for IDR bonds in the immediate term period – targeting 10y around 6.50% this week.
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